Eltek Reports Revenues of $8.5 Million in 3Q18

Eltek Ltd. has released its financial results for the quarter ended September 30, 2018.

"The third quarter of 2018 was the first quarter in my role as the CEO of Eltek. During this quarter our revenues were $8.5 million, up 10% from Q3-2017 and the net loss decreased to $463,000 from a net loss of $1.2 million in Q3-2017.

"As recently announced, we have established a new leadership team to implement our turnaround plan. We have begun a process of identifying the products that were underpriced and they are being addressed. In addition, efficiency measures have been implemented in order to reduce our break-even-point. Though there may be an initial reduction in sales volume, this should improve our on-time delivery performance, increase customer satisfaction and build sales from there and return to profitability," said Eli Yaffe, chief executive officer.

"I see significant potential for Eltek in the high-end PCB market with our skilled engineers and experienced management. I am optimistic that we will be able to capitalize on our strengths in returning the Company to profitability and to renew our position as a leading high-end PCB manufacturer," Yaffe concluded.

Highlights of the Third Quarter of 2018

Revenues for the third quarter of 2018 were $8.5 million, compared to $7.7 million in the third quarter of 2017

Gross profit was $973,000 (11.4% of revenues), compared to gross loss of $32,000 (0.4% of revenues), in the third quarter of 2017. Excluding a $348,000 one-time amortization of a software system in Q3-2017 gross profit for the third quarter of 2017 was $316.000

Operating loss was $307,000, compared to an operating loss of $1.2 million, in the third quarter of 2017

Net loss was $463,000, or $0.23 per fully diluted share, compared to a net loss of $1.2 million, or $0.59 per fully diluted share in the third quarter of 2017

EBITDA was $109,000 (1.3% of revenues), compared to a negative EBITDA of $422,000 (5.5% of revenues) in the third quarter of 2017

Net cash provided by operating activities amounted to $164,000, compared to net cash used in operating activities of $1.3 million in the third quarter of 2017. The change is mainly attributable to the operating results in this quarter and changes in asset and liability accounts

Cash and cash equivalents as of September 30, 2018 were $1.2 million, compared to $1.0 million as of September 30, 2017

Highlights for the First Nine Months of 2018

Revenues for the first nine months of 2018 were $26.1 million, compared to $23.7 million in the first nine months of 2017

Gross profit was $2.0 million (7.6% of revenues), compared to gross profit of $587,000 (2.5% of revenues) in the first nine months of 2017;

Operating loss was $1.7 million, compared to an operating loss of $2.9 million in the first nine months of 2017

Net loss was $2 million, or $0.97 per fully diluted share, compared to a net loss of $3.1 million, or $1.53 per fully diluted share, in the first nine months of 2017

EBITDA was a negative $374,000 (1.4% of revenues) compared to a negative EBITDA of $1.2 million (5.1% of revenues) in the first nine months of 2017

Net cash used in operating activities amounted to $951,000 million compared to net cash used in operating activities of $2.6 million in the first nine months of 2017

Financial Status

As of September 30, 2018, the Company was not in compliance with its financial covenants with its banks and does not expect to be in compliance at December 31, 2018. The Company has initiated discussions with its banks to obtain waivers for such non-compliance. As a result, long term bank loans amounting to $215,000 were reclassified from long term to short term.

In April 2018, Nistec, our controlling shareholder, provided a letter of commitment to the Company to provide additional financing in the amount of up to $2.5 million, valid for one year, of which $2.2 million has been utilized. It should be noted that the Company is making efforts to improve operations and its cash position (including applicable waivers), although there is no certainty that the Company will be able to attain these goals.

Nasdaq Continued Listing Status

On December 11, 2018, the Company announced that it intends to increase its shareholders' equity through a rights offering to shareholders, as part of the plan submitted to Nasdaq Listing Qualifications Department to regain compliance with the Nasdaq minimum stockholders' equity of $2.5 million requirement for continued listing. As reported, NASDAQ has notified the Company that it has until March 31, 2019, to regain compliance. We also announced that Nistec Ltd., the Company's controlling shareholder, intends to exercise the rights to be offered to it in the rights offering, by converting approximately $2.5 million of debt owed to it by the Company, into ordinary shares of the Company. As is customary in rights offerings, it is expected that the rights offering will be made at a discount to market.

The Ordinary Shares to be issued by Eltek in the proposed rights offering have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company intends to file a registration statement with the Securities and Exchange Commission for purposes of registering the Ordinary Shares issuable in connection with the proposed rights offering.

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Eltek Reports Revenues of $8.5 Million in 3Q18

Eltek Ltd. has released its financial results for the quarter ended September 30, 2018.

"The third quarter of 2018 was the first quarter in my role as the CEO of Eltek. During this quarter our revenues were $8.5 million, up 10% from Q3-2017 and the net loss decreased to $463,000 from a net loss of $1.2 million in Q3-2017.

"As recently announced, we have established a new leadership team to implement our turnaround plan. We have begun a process of identifying the products that were underpriced and they are being addressed. In addition, efficiency measures have been implemented in order to reduce our break-even-point. Though there may be an initial reduction in sales volume, this should improve our on-time delivery performance, increase customer satisfaction and build sales from there and return to profitability," said Eli Yaffe, chief executive officer.

"I see significant potential for Eltek in the high-end PCB market with our skilled engineers and experienced management. I am optimistic that we will be able to capitalize on our strengths in returning the Company to profitability and to renew our position as a leading high-end PCB manufacturer," Yaffe concluded.

Highlights of the Third Quarter of 2018

Revenues for the third quarter of 2018 were $8.5 million, compared to $7.7 million in the third quarter of 2017

Gross profit was $973,000 (11.4% of revenues), compared to gross loss of $32,000 (0.4% of revenues), in the third quarter of 2017. Excluding a $348,000 one-time amortization of a software system in Q3-2017 gross profit for the third quarter of 2017 was $316.000

Operating loss was $307,000, compared to an operating loss of $1.2 million, in the third quarter of 2017

Net loss was $463,000, or $0.23 per fully diluted share, compared to a net loss of $1.2 million, or $0.59 per fully diluted share in the third quarter of 2017

EBITDA was $109,000 (1.3% of revenues), compared to a negative EBITDA of $422,000 (5.5% of revenues) in the third quarter of 2017

Net cash provided by operating activities amounted to $164,000, compared to net cash used in operating activities of $1.3 million in the third quarter of 2017. The change is mainly attributable to the operating results in this quarter and changes in asset and liability accounts

Cash and cash equivalents as of September 30, 2018 were $1.2 million, compared to $1.0 million as of September 30, 2017

Highlights for the First Nine Months of 2018

Revenues for the first nine months of 2018 were $26.1 million, compared to $23.7 million in the first nine months of 2017

Gross profit was $2.0 million (7.6% of revenues), compared to gross profit of $587,000 (2.5% of revenues) in the first nine months of 2017;

Operating loss was $1.7 million, compared to an operating loss of $2.9 million in the first nine months of 2017

Net loss was $2 million, or $0.97 per fully diluted share, compared to a net loss of $3.1 million, or $1.53 per fully diluted share, in the first nine months of 2017

EBITDA was a negative $374,000 (1.4% of revenues) compared to a negative EBITDA of $1.2 million (5.1% of revenues) in the first nine months of 2017

Net cash used in operating activities amounted to $951,000 million compared to net cash used in operating activities of $2.6 million in the first nine months of 2017

Financial Status

As of September 30, 2018, the Company was not in compliance with its financial covenants with its banks and does not expect to be in compliance at December 31, 2018. The Company has initiated discussions with its banks to obtain waivers for such non-compliance. As a result, long term bank loans amounting to $215,000 were reclassified from long term to short term.

In April 2018, Nistec, our controlling shareholder, provided a letter of commitment to the Company to provide additional financing in the amount of up to $2.5 million, valid for one year, of which $2.2 million has been utilized. It should be noted that the Company is making efforts to improve operations and its cash position (including applicable waivers), although there is no certainty that the Company will be able to attain these goals.

Nasdaq Continued Listing Status

On December 11, 2018, the Company announced that it intends to increase its shareholders' equity through a rights offering to shareholders, as part of the plan submitted to Nasdaq Listing Qualifications Department to regain compliance with the Nasdaq minimum stockholders' equity of $2.5 million requirement for continued listing. As reported, NASDAQ has notified the Company that it has until March 31, 2019, to regain compliance. We also announced that Nistec Ltd., the Company's controlling shareholder, intends to exercise the rights to be offered to it in the rights offering, by converting approximately $2.5 million of debt owed to it by the Company, into ordinary shares of the Company. As is customary in rights offerings, it is expected that the rights offering will be made at a discount to market.

The Ordinary Shares to be issued by Eltek in the proposed rights offering have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company intends to file a registration statement with the Securities and Exchange Commission for purposes of registering the Ordinary Shares issuable in connection with the proposed rights offering.

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